ENE Kos 1 Ltd v Petroleo Brasilieiro SA; [2009] EWCA Civ 1127; [2009] WLR (D) 313

COSTS — Payment into court — Effective date of payment in when made by cheque — Defendant ordered to make payment in by certain date — Defendant paying foreign currency cheque into court funds office by required date — Judge determining that order required cleared funds to be in court funds office by required time — Whether effective date of payment in when cheque received in court office or when funds have cleared — Whether difference if sterling cheque or foreign currency cheque — Court Funds Rules 1987 ( SI 1987/821), r 16, 38

ENE Kos 1 Ltd v Petroleo Brasilieiro SA

[2009] EWCA Civ 1127; [2009] WLR (D) 313

CA: Waller, Arden, Dyson LJJ: 30 October 2009

The effective date of a payment into court where payment was made by cheque, whether a sterling cheque or a foreign currency cheque, was the date when the cheque was lodged in the court fund office.

The Court of Appeal so stated when dismissing the appeal of the defendant, Petroleo Brasilieiro SA, against a decision of Fieldon J on 23 July 2009 [2009] EWHC 1843 (Comm) to grant summary judgment in a claim by the claimant, ENE Kos 1 Ltd, for a declaration that withdrawal of its vessel chartered to the defendant for failure to pay hire charges was lawful and valid. The judge had initially declined summary judgment on condition that the defendant, which was seeking to challenge the claim, “by 5 p m on 27 February 2009 shall pay into court the sum of US$ 500,000". The defendant had deposited a US dollar cheque with the court fund office by that date. The judge had subsequently granted summary judgment on the ground that his order had required that cleared funds be held by the court fund office on the specified date.

DYSON LJ said that the appeal raised the question: what was the effective date of a payment into court where payment was made by cheque? Was it when the cheque was received in the court office or was it when the funds had been cleared? Did it make any difference if the cheque were in a foreign currency? There was no previous authority on the point. The meaning and effect of the judge’s order had to be judged by reference to the relevant rules and applied to cheques generally. R 16(6)(ii) of the Court Funds Rules 1987 relating to sterling cheques was clear and unequivocal. The effective date of lodgement was the “date of receipt in the court funds office”. That construction avoided uncertainty and the real possibility of injustice to the paying party and was consistent with the general law as to the effective date of payment where payment was made by cheque. R 38 of the 1987 Rules which provided for the lodging of foreign currency was silent on the subject of the effective date of lodgement of a foreign currency cheque. But the question of the effective date of lodgement was dealt with by r 16(6)(ii). There was no reason for reading that provision as being limited to sterling cheques. Accordingly the effective date of lodgement of any cheque was the date of its receipt if the court funds office unless the accountant general had determined that it was a later date. The accountant general had not made such a determination. However, since in the light of unchallenged evidence which had become available since the hearing the claimant would be bound to succeed at trial, the appeal would be dismissed.

ARDEN and WALLER LJJ delivered concurring judgments.

Appearances: Christopher Hancock QC (instructed by Thomas Cooper) for the defendant; Bernard Eder QC (instructed by Ince & Co) for the claimant.

Reported by: Alison Sylvester, Barrister